The carrier cast adrift in International Airlines Group's British Midland deal
has added 100 new jobs and a dozen new routes.

It was a wing of the business that Willie Walsh did not fancy when he paid Lufthansa £172m last year to acquire British Midland.

The boss of British Airways-owner International Airlines Group swiftly got shot of Bmi Regional, not only offloading its 18 Embraer aircraft last June for just £8m, but its forecast losses to boot.

Few questioned his judgment, given that IAG was interested in British Midland's slots at Heathrow, not its regional network. But a year on, Bmi Regional is looking anything but a cast-off.

Last week, the carrier celebrated its first anniversary as a standalone airline, during which time it has added 12 new routes, opened new bases in Bristol and Birmingham, created 100 new jobs and carried more than 500,000 passengers.

It has done this after a rollercoaster first 150 days when, in the words of chief executive Cathal O'Connell, "we had to set up the infrastructure of the airline, while we were operating it. We likened it to doing an engine change in flight."

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O'Connell, an airline veteran from Aer Lingus, Aer Arran and Eastern Airways, says the first challenge was to disentangle the regional business from British Midland's main BMI mainline operation – with an October 2012 deadline to complete the job.

"The airline operated all of its services under Bmi," he says. "Even the flight number we had to change. We had 150 days to create the infrastructure, set up bank accounts, make arrangements with credit card companies, sort out the IT and reservations system. You're usually looking at an eight to 10 months project. We had to do it in half that time. I look back and it's just a haze."

Bmi Regional was acquired by Sector Aviation Holdings, a company predominantly owned by Stephen and Peter Bond, whose family sold helicopter rescue group Bond Aviation for £275m in 2010 to private equity house KKR and investment firm Investindustrial. Since that deal, the brothers have also bought another regional carrier: Scotland's Loganair.

The Bond family had backed two stalwarts of the aviation industry, Ian Woodley and Graeme Ross, who had previously approached Lufthansa about buying an airline operation they already knew well.

The duo had set up the precursor to Bmi Regional – Aberdeen-based Business Air – selling it to British Midland in 1996. Woodley now chairs Bmi Regional.

The other main test has been building an independent route network. As O'Connell explains, as a "subsidiary of Bmi, Bmi Regional's primary function was to feed passengers into the Star Alliance network," the airline grouping that includes Lufthansa and United Airlines.

That cannot be the model for a standalone Bmi Regional. So it is building its own network, launching its latest new route last week from Birmingham to Billund, Denmark, which brings the total to 23. Last month, the carrier started flights to Gothenburg, Lyon and Toulouse from Birmingham and to Munich, Milan and Hannover from Bristol – all on the same day.

"We began to look at what the aircraft can deliver given the size of the planes – 14 49-seat Embraers and four 37-seaters," says O'Connell. "We wanted to find routes that had reasonably strong business content, where we could add leisure travellers."

On its Bristol-Hamburg route, for example, O'Connell says: "We worked out which key businesses in the region – such as Airbus and Imperial Tobacco – have significant interests in Hamburg and went to see them. We asked how they were travelling there and found they were doing all sorts of things, such as driving to Heathrow. That gave us the confidence to put in our own service."

Rapidly expanding airlines are notorious for getting into trouble – and, prior to the IAG deal, bidders for British Midland were handed an information pack that had the regional business heading for around £4m losses on roughly £80m sales.

"We don't discuss the figures but we are on plan," says O'Connell, though industry sources believe the debt-free business is aiming for operating breakeven by April 2014.

A charter business – carrying 16 of the Premiership's 20 clubs last season – adds to the customer mix, while the airline also has at least one more decision to make. Since April this year, the carrier has been free to use the British Midland brand, dating back to 1964.

"Will we re-brand? We haven't finalised our plans yet," says O'Connell, adding that resuscitating that monkiker could "make us the oldest start-up in town".